Mohamed El-Erian: Powell May Resign to Preserve the Independence of the U.S. Federal Reserve

SadaNews - Economic expert Mohamed El-Erian has highlighted the developments in the dispute between U.S. President Donald Trump’s administration and Federal Reserve Chairman Jerome Powell, indicating that the latter might have to resign to maintain the independence of the U.S. central bank, warning against the dangers of undermining this independence.

El-Erian, who is the head of Queen's College at the University of Cambridge, stated in a post on his social media account, X (formerly Twitter), "This morning, the U.S. government's criticism of Federal Reserve Chairman Powell and the institution itself has expanded to include the expansion of the Fed's responsibilities and the effectiveness of other officials."

He added, "The developments of the past few days reinforce my point of view; if Chairman Powell's goal is to protect the operational independence of the Federal Reserve - which I consider vital - then he should resign."

El-Erian continued, "I recognize that this is not the prevailing opinion, which prefers him to remain until the end of his term in May 2026, and it is also not the ideal option, which is simply an unattainable matter; however, it is better than what is happening now - the increasing and growing threats to the independence of the Federal Reserve - and will undoubtedly increase if he remains in office."

The economic expert explained, "As for the market's reaction, most of the candidates frequently mentioned to succeed Chairman Powell will be able to calm any potential market tensions."

The U.S. president continued his attack on the Federal Reserve chairman, as Trump stated at a press conference on Tuesday that the Federal Reserve chairman is "stupid" for keeping interest rates too high, but he will leave his position in eight months.

He added, "I believe he has not acted wisely, but he will leave his position soon anyway, in eight months he will leave his position."

U.S. Treasury Secretary Scott Biesen had earlier stated that there is no need for Powell to resign from his position immediately.

However, he pointed out that Powell's term as chairman of the Federal Reserve ends in May 2026, and that Powell should complete his term fully if he wishes to do so.